HOUSTON—The Panama Canal, the center of global trade, is looking to become the key path of another commodity: LNG.

“We’re thinking that Panama has to join the future, and the future is in gas,” said Victor Urrutia, Secretary of Energy for Panama, at a breakfast held at OTC 2015 on May 5.

Urrutia said the Panama Canal Expansion coincides in a way with another highly anticipated project: the completion of the first facility in the U.S. to export LNG.

The canal’s current expansion is the largest project at the canal since its original construction in 1914. The project will create a third lane of traffic along the canal through the construction of a new set of locks, doubling the waterway’s capacity and having a direct impact on economies of scale and international maritime trade.

Urrutia told attendees at the conference the country is expecting LNG to account for much of the traffic on the canal following the expansion.

“This is curious because when the expansion was planned in the ’90s, LNG was not in the picture,” he said.

The new lane is expected to open in 2016, soon after Cheniere Energy Inc. completes the Sabine Pass liquefaction terminal on the Louisiana coast.

About 54 companies in the U.S. have applied for applications to export LNG to federal trade agreement (FTA) and non-FTA countries. Companies continue to jockey for position, though only eight companies have applied to export more than 56.6 MMcm/d (2 Bcf/d).

If all applications were granted, roughly 1.3 Bcm/d (47.05 Bcf/d) would be exported from the U.S. to FTA countries and 1.1 Bcm (40.31 Bcf/d) to non-FTA countries.

Panama also could be the appropriate place to do storage, bunkering and distribution for LNG since the country has been doing that for other commodities in the region, according to Urrutia. “We think there’s a big future for tying off this LNG distribution idea with the Panama Canal,” he said.

Houston and Panama have a historic relationship and a strategic partnership centered on the Panama Canal and the Houston Ship Channel, said Juan Sosa, consulate of Panama.

The city of Houston is the number one trade partner of Panama. More than one out of every four vessels from the Port of Houston goes through the Panama Canal, he said.

When the expansion is finished, Sosa said, “the opportunities between Houston and Panama will just skyrocket.”

Currently, less than 10% of the LNG fleet can go through the canal. With the expansion, the canal will be able to provide a path for 80% of the fleet, he said.

Urrutia said he’s also looking at LNG for domestic use in Panama, though it won’t be much since it’s a small country.

Oil Exploration

Panama might be heading to open its waters for exploration of oil, Urrutia said. Currently there is no oil production in the country, but that could soon change. Urrutia said he has heard from several people who expressed an interest, and the likelihood of offshore exploration is growing.

“We’re probably going to be doing something this year, going out for proposals to do exploration and at least learn more about it before we get too far on exploitations,” he said.

Urrutia did point out the amount of oil exchanged in the bunkering activities is comparable to Panama’s oil consumption, which is mostly for transport.